Stop order
Also known as: buy stop, sell stop, stop entry order
Stop order: A stop order is an order to buy once the price rises to a set level (buy stop) or to sell once it falls to a set level (sell stop). When triggered, it typically becomes a market order.
How a stop order works
A stop order waits for a worse price than the current one. On most retail FX platforms, a buy stop is triggered when the ask reaches the order price and a sell stop when the bid does. Because it typically becomes a market order when triggered, the fill can differ from the stop price in fast markets.
When traders use it
Stop orders are used to enter when the price breaks through a level — for example buying above resistance — and, as a stop loss, to exit a losing position.
Stop order vs stop loss
A stop loss is a stop order attached to an open position: a sell stop below a long position or a buy stop above a short one. A stop entry order, by contrast, opens a new position when the price breaks through a level.
Example
With EUR/USD at 1.0850, a buy stop at 1.0880 opens a long position if the price breaks above 1.0880.
Learn more
- Forex Order Types: Market, Limit, Stop and More Explained
A guide to forex order types — market, buy/sell limit, buy/sell stop, stop-limit, stop loss, take profit, trailing stop and OCO — with examples.
Related terms
- Limit order
A limit order is an order to buy or sell at a set price or better. A buy limit is placed below the current price and a sell limit above it.
- Stop loss
A stop loss is an order that closes a position automatically if the price moves against you to a set level. It is designed to limit the loss on a trade, but it does not guarantee the exit price.
- Slippage
Slippage is the difference between the price you expect when placing an order and the price at which it is actually filled. It can work against you (negative slippage) or in your favour (positive slippage).